The investment community was blessed this week with the opportunity to hear legendary investor Stanley Druckenmiller share some of his thoughts about investing.  Stanley is mostly known for the $1 billion dollars he made for George Soros betting against the British Pound in 1992.  From 1986 to about 2007 his fund had averaged 30 percent annually.  In 2010, he decided to give back outside money due to his frustration to produce the returns he was accustomed to. He was managing too much money, and that made it extremely hard to produce significant returns.

Stanley sat down for an interview with Andrew Sorkin at the DealBook conference on November 3rd, 2015.  I won’t get into what he is buying or selling because like everyone else he is going to be wrong half the time and if he changes his mind about something he mentioned we probably won’t know about it. However, there were some important investing lessons we can all learn from.

Stanley in bold;

“Everybody is managing for the short term”. This is true, corporations want to make sure they beat the earnings guidance every quarter, investors/traders want to beat the SP500 every day, money managers want to beat it every month.  This thinking at times makes people do things they shouldn’t. Time is the most valuable tool an investor has.

“A lot of things work in the classroom that don’t work in the real world”. This statement is a universal statement; there is nothing like hands-on experience.  There might be some benefit to paper trading; however it misses one of the biggest components of investing which is emotions.

“I’m very open minded, and I can change my mind very quickly”.  This is crucial, there’s saying on Wall Street; “you want to be right or do you want to make money.” Being wrong in the stock market is not an option, staying wrong is.

“It’s very hard to short stocks, it sounds great in theory, it’s very difficult because basically you are playing against the house, the government, the security industry, everyone.”  Shorting is tough, you have many things going against you, all you have to do is look at the stats, in the last 35 years the average intra-year decline has been 14% on the SP500 and yet the market managed to close higher for the year 28 out those 35 years.

Full Interview

Picture;/Insider Monkey

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